GlobalData’s latest report, ‘Quarterly Equipment and Services M&A Deals Review – Q4 2019’, shows that a combined value of US$7.2 billion in mergers and acquisitions (M&A) were announced in the equipment and services sector in Q4 2019.
This was an enormous increase from the US$2.1 billion in M&A deals announced in the previous quarter. A year-on-year comparison witnessed a decrease of 28% in the number of deals and 53% in value, compared with Q4 2018, when there were 131 deals worth a combined value of US$15.3 billion.
Apergy’s agreement to acquire Nalco Champion upstream energy business from Ecolab for approximately US$4.4 billion was the top deal registered in Q4 2019. Nalco Champion’s upstream energy business consists of the drilling, completion, and energy production, chemistry sciences, and solutions operations. Following the completion of the transaction, Nalco Champion will be renamed as ChampionX. Existing Apergy and Ecolab shareholders will own 38% and 62% of the combined entity, respectively.
Bank of America has provided a term loan facility to ChampionX. Centerview Partners LLC and Lazard are acting as financial advisors, while Weil, Gotshal & Manges LLP is acting as legal advisor to Apergy. BofA Securities is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Ecolab. The transaction will enable Apergy to expand its global business in drilling equipment and completion services for oil and gas producers
On the volume front, the number of M&A increased by 24% from 76 deals in Q3 2019 to 94 in Q4 2019, of which 30 were cross border transactions and the remaining 64 were domestic transactions. Europe was the destination of choice for cross-border M&A activity in Q4 2019, recording 14 cross-border transactions in the quarter.
Regionally, North America led the global M&A market in terms of the number of deals and deal value in Q4 2019, with 40% and 76% shares respectively, registering 39 deals with a combined value of US$5.5 billion in Q4 2019. Europe accounted for 35% share in Q4 2019, comprising 34 acquisitions, of which 14 were cross-border and the remaining 20 were domestic acquisitions, while Asia accounted for twelve global deals, or 12% in Q4 2019, of which ten were domestic acquisitions and the remaining two were cross-border transactions. The Middle East and Oceania each registered four deals in Q4 2019 and Africa accounted for 3% of global deals, or three deals in the quarter.